Spurred by deflated crude oil costs, ExxonMobil cut its base oil prices this week, a move that other suppliers appeared likely to follow.
According to sources, ExxonMobil lowered its posted prices for bright stock by 10 cents per gallon, all other base oils by 5 cents per gallon. Citing the companys role as the markets volume leader, industry insiders predicted that other suppliers will follow suit, with some cutting their own prices as early as tomorrow.
Were still discussing what were going to do, one marketer said. But frankly, I cant see any [major suppliers] not lowering prices.
ExxonMobils cut came as crude oil prices continued to sag under a slowing economy. Crude fell 29 cents on the New York Mercantile Exchange Tuesday to close at $22 per barrel, approximately 20 percent lower than before the Sept. 11 terrorist attacks in New York and Washington, D.C.
Many observers had feared that United States retaliation would disrupt Middle Eastern supply and drive prices higher but the economic downturn has proved more powerful. OPEC has intervened, trying unsuccessfully to return prices to the $25-per-barrel range.
Reduced crude costs have swelled base oil margins, creating room for price reductions. Lubricant producers will doubtless welcome any reduction, after several price hikes over the past year. Still, a base oil purchaser for one major lubricant producer warned that lube companies may derive little enjoyment.
Consumption has slumped so much at this point that this price reduction may just be passed right on through, he said. And it still may not be enough to raise consumption.
Historic U.S. posted base oil pricesand WTI and Brent crude spot prices are available for purchase in Excel format.
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